With the wave of mass layoffs in tech, thousands of employees are finding themselves without jobs and without support. How did they get here, and who is to blame? This week’s blog analyzes the shift from binge-hiring to mass-layoffs, and what employee retention and DEI have to do with it. Read on for more >>
Tens of thousands of tech workers around the world have recently joined the ranks of the unemployed, and the wave of layoffs has only just begun.
Up until recently, the industry seemed to be booming; companies large and small were in a binge-hiring frenzy. Considering the massive growth reported by most companies in the tech sector just a few months ago, some believed it was only a matter of time before the bubble would burst.
Which brings us to today. Now that companies have taken a moment to take stock of the situation and are looking ahead to 2023, they have begun a steady wave of layoffs in an attempt to reduce costs and downsize citing changing economic conditions.
Why are so many companies suddenly finding themselves in a situation where they have to let go of a significant amount of their employees? And where did these employees come from?
Should They Stay or Should They Go?
Let’s take a look at the statistics. According to one source, more than 760 tech companies around the world have laid off workers in 2022, ranging from just a handful of layoffs in smaller companies to hundreds and thousands in the larger ones. According to one report, a whopping 42,000 people worldwide were laid off in November alone.
The wave of layoffs came on the heels of the Great Shuffle, which was the massive attitudinal shift toward hybrid and remote working that came about with the Covid-19 pandemic. We saw more and more workers voluntarily leaving their jobs in search of something that would better suit their new lifestyles in an isolated and then post-pandemic world.
But we also saw a hiring frenzy as people moved to new companies or transitioned into new roles within their own organizations. Many tech companies in particular were bolstered by their surprising success and eagerly onboarded more and more employees.
Yet somehow, these companies seemed to be managing just fine with fewer employees just a few months or quarters ago. Why the sudden about-face?
Layoffs and Lafas
Israel’s tech scene has been no exception to the unfortunate rule. In fact, some Israel-based companies are already in the midst of their second round of layoffs. Over 6,500 employees have been fired from Israeli tech firms in 2022 alone - 3,200 of whom were fired in the last three months.
According to a recent Globes report, most of the Israeli companies are firing junior staff members, including young software and IT professionals, as well as HR, marketing and sales employees. But even the more experienced and senior software or hardware developers, often considered the “core” of Israel’s tech scene, have fallen victim to the wave of layoffs.This is despite claims that there is a constant and unmet demand for quality, experienced employees in IT related fields.
How To Right Size the Ship
What both the binge hiring and wave of layoffs point to is a faulty hiring strategy that negatively impacts on the careers of countless professionals, and ultimately on the entire industry.
These companies didn’t need to hire so many new employees in the first place. They shouldn’t binge-hire because they’re optimistic, and they won’t have to make mass layoffs when reality strikes. Instead, a company should always aim to be optimized, or as one CEO put it, rightsized.
After all, if employees can be hired and fired on a whim, what does that say about the company’s operational strategy and leadership? And more to the point, what does it say about the company’s culture and priorities if it considers its workers so expendable?
What we’re experiencing in the corporate world today is a revolving door- from transitions and binge-hires to layoffs, and back again. This clearly points to poor leadership and management, but even more so to weak or non-existent employee retention policies.
Layoffs should not be used as the go-to operation strategy during an economic downturn. At Hunter, we believe that methods of employee retention need to apply in the best and worst of times.
Here’s How.
Companies need to emphasize the importance of their employees’ sense of inclusion and belonging at every stage of the employee lifecycle. There are a few ways that companies can establish or improve their layoff processes so that they are truly rooted in inclusion and belonging.
The first is to lead with empathy- when dealing with an affected employee, be vulnerable and make it clear that it is not a decision you take lightly. It is also important to consider who is being laid off and if a specific demographic is being excluded. The company’s leadership needs to put time and effort into creating a place with a culture that is supportive and encourages sustained inclusivity. Even if layoffs are inevitable, failing your employees is not.